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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Saturday, 20 November 10
ITALIAN STEAM COAL MARKET HAS RECOVERED - ITALIAN COAL ASSOCIATION
Press Release - This year Italy will import 17 million tons of steam coal, up 3% from 2009, and 5.5 million tons of coking coal and PCI, up 37% over ...
Friday, 19 November 10
WE'LL THINK ABOUT COAL TOMORROW - ANALYSIS
The future of coal generation in Russia is in question. The largest energy companies have abandoned their initial plans to switch their therma ...
Friday, 19 November 10
DRY BULK MARKET ON THE ROPES WITH BDI PLUNGING TO 2,164 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the panamax markets suffering the most this week, but a ray of hope for the capesize market, which appears to be stabilizing after days of fall ...
Thursday, 18 November 10
WORLD COAL ASSOCIATION WELCOMES NEW CHAIRMAN & SHENHUA GROUP AS NEW MEMBER 17 NOVEMBER 2010
Press Release – The premier global coal industry association marks its 25th anniversary with a new Chairman and welcomes China’s lar ...
Thursday, 18 November 10
MUNDRA PORT AWARDED BEST PRIVATE PORT - COMMODITY ONLINE / HELLENIC SHIPPING
Adani Group owned, Mundra Port has been awarded the Annual Indian Maritime Gateway Award for the Best Private Port of the Year for the third consecu ...
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- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Australian Coal Association
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- The University of Queensland
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- PTC India Limited - India
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